Department of Health figures showed the net deficit for the West Midlands was £36 million, because other parts of the NHS underspent their budgets.

Nationally, the net overspend in the NHS in 2005-6 was £512 million - more than double the £221 million in 2004/05.

Ms Hewitt said the figure was less than one per cent of the total NHS budget and rejected claims that it meant the NHS was in crisis.

However, she conceded that stopping hospitals getting into further debt next year would involve further job cuts.

She said: "There will be difficult decisions to be made, particularly in the minority of t rusts with substantial deficits.

"In some cases, this will mean workforce reductions.

"But there will not be the wholesale redundancies across the NHS that some commentators have forecast."

Midland hospitals have already announced a series of job cuts. University Hospital of North Staffordshire is axing 1,000 posts, New Cross Hospital in Wolverhampton is cutting 300 and Shrewsbury and Telford is also losing 300 staff.

Sandwell and West Birmingham NHS Trust, which runs Sandwell Hospital and City Hospital, lost 200 posts last year and is set to cut another 800 this year.

A spokeswoman for the trust, which overspent by £5.9 million, said: "These measures are designed to ensure we achieve financial balance this year."

Birmingham and the Black Country Strategic Health Authority said it was confident hospitals would end their year within budget.

A spokeswoman said: "It is our priority to achieve financial balance across the West Midlands and we are confident we can do that within the next year."

Tory MP Andrew Mitchell (Con Sutton Coldfield) said: "Clearly, hospitals must live within their means. But the Government has sent mixed messages, on the one hand to meet certain targets and on the other to live within budget."

Labour MP Richard Burden (Lab Northfield) said he was concerned about plans to ask health services which ended the year with surpluses, such as South Birmingham Primary Care Trust, to subsidise others which ran up debts.

Shadow Health Secretary Andrew Lansley said: "These unaudited figures will deepen the crisis of confidence in the Government's stewardship of the NHS."